ECO - A market unexplored

The world is getting smaller. Countries are trying to be part of something bigger to enjoy scale economies. Cooperation creates more benefit than competition. That is why from having regional alliances to having trading bloc alliances, the world is becoming more connected and seamless. While the most successful trading blocs are also the ones that have developed countries in it, many smaller alliances have also become successful too. In this context, the 24th ECO Council of Ministers' meeting held on 9th November 2019 at Antalya, Turkey, is of special significance. The meeting held important observations regarding the region. The overall consensus was that while some progress has been made, much more needed to be done.

The Economic Cooperation Organisation (ECO) needs cooperation. It needs to do what needs to be done. It has not realised what it needs to realize. The realisation that this is perhaps the most resource rich and organizationally poor trading bloc is sinking in. The realisation that each member is losing out a golden opportunity to do what China has done with BRI (Belt and Road Initiative) is creeping in. The realization that if they do not generate more trade with each other they will keep on losing out to other trading blocs is there. Thus in the 24th ECO Council of Ministers' meeting some harsh realities were brought up. The ECO is a trade story that has yet to be told.

The ECO region comprises 10-member states - Azerbaijan, Afghanistan, Iran, Kazakhstan, Kyrgyz Republic, Pakistan, Turkey, Tajikistan, Turkmenistan and Uzbekistan. Pakistan, Iran and Turkey are the founder members of the regional bloc. The objective of creation of the ECO region is to promote economic, technical and cultural cooperation among the member states. The ideal location of ECO as the center of Asia with diverse natural resources make it an ideal candidate for trade and development. Pakistan has a strong textile base and is the 5th largest milk producer, Iran and Azerbaijan, Kazakhstan, and Turkmenistan have oil & gas reserves while Afghanistan is enriched with precious and semi-precious gems and hand-woven carpets. Uzbekistan has gold and mineral resources. Kyrgyzstan is naturally endowed with uranium and other precious metal. Tajikistan is blessed by nature with minerals while Turkey is one of the largest exporters of transport equipment.

Trade should be a natural consequence of this diversity. It is not. The contribution of the ECO region in world trade is just two percent notwithstanding the fact that the ECO has 6.2 percent of world population. Intra-regional trade accounts 8.4 percent of total trade of world which is far below the potential available. At present, the total trade of all ECO member countries stands at US$ 804 billion in 2018 which has registered a declining trend compared to US$ 836 billion in 2012.

Pakistan, which is even more strategically placed as an entry point to Central Asia has consistently performed below par on trade level with ECO countries. Pakistan is one of the founding members of ECO region; Sadly, the exports of Pakistan to ECO countries have declined during the last five years. At present, Pakistan's export to ECO countries is US$ 1.8 billion which was US$ 2.3 billion in 2014 whereas Pakistan's imports from ECO countries indicate an increasing trend and stand at US$ 1.2 billion compared to US$ 791 million in 2014. Trade deficit indicates a lack of vision and understanding of the potential of this bloc.

The current 24th Council of Ministers' meeting was a great opportunity for reviewing its performance and renewing the roadmap to a more productive ECO forum and region. Pakistan put its case forcefully as to what Pakistan and the other member countries need to do to achieve more. The following are the steps proposed:

1. Less is more - In a world that is moving at the speed of light the new competition rule, is less is more. With advancement in technology, distances are reducing, movement of goods and services is becoming seamless and products are becoming leaner and smarter. A laptop that used to take 4 months to assemble takes 4 minutes to assemble at a lesser cost. On the contrary, in ECO more is less. The ECO has 6.2% of the most young and vibrant population of the world but its share of trade is only 2.1%. What is needed is a country-to-country list of products that are non-controversial that can be pushed across the borders without hassles. For this the activation of ECOTA (ECO Trade Area) is crucial. Member countries late at ratifying some treaties in this preferential agreement need to be penalized and pushed in making this agreement more effective.

2. From Vision to Action - In 2015, in the ECO Islamabad summit the member countries formed a new 'Vision 2025'. It is an excellent vision statement that clarifies the direction in which the ECO needs to move. The statement was "ECO will pave the way to a territory of integrated and sustainable economies as well as free trade area achieved by highly educated societies and improved governance through enhanced cooperation." This is a beautiful and inspiring dream statement. However vision without action is a dream turning into a nightmare. According to this statement, trade should have doubled. It has not. Thus, a need for a feasible action plan signed by all members to ensure that this vision does not become another statement on the wall.

3. Connectivity is Prosperity - The geographical proximity and centrality of ECO is ideal for transit trade and transport links. OBOR - One Belt One Road - initiative of China is linking the most distant countries. North-South Transport Corridor, the Trans-Caspian Transportation Route, the China - Pakistan Economic Corridor, Chabahar and Gwadar ports complement each other and can provide cheap and quicker alternatives for trade to Europe and other parts of the world. Many of these initiatives are lying dormant in the ECO as member countries are not paying their share of resources and ratifying the agreements needed to spur the infrastructure potential.

After the two world wars, Europe signed the single market treaty in Maastricht in 1950. This was followed by the highest level commitment by the member countries to integrate more and more with a single currency, Eurorail and many other initiatives. The ECO needs a lead and push of that nature, level and scale to start reaping its naturally gifted benefits. With Turkey becoming the Chair for the 24th Session, Pakistan has a golden opportunity to synergize its excellent relationship with Turkey to have an actionable, measurable and accountable framework to position Central Asia as a hub where all roads, east or west, lead to trade, tourism and development.

(The writer can be reached at [email protected])